Correlation Between Amazon and Greenfire Resources

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Can any of the company-specific risk be diversified away by investing in both Amazon and Greenfire Resources at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Amazon and Greenfire Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and Greenfire Resources, you can compare the effects of market volatilities on Amazon and Greenfire Resources and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Amazon with a short position of Greenfire Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and Greenfire Resources.

Diversification Opportunities for Amazon and Greenfire Resources

0.07
  Correlation Coefficient

Significant diversification

The 3 months correlation between Amazon and Greenfire is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Greenfire Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greenfire Resources and Amazon is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Amazon Inc are associated (or correlated) with Greenfire Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greenfire Resources has no effect on the direction of Amazon i.e., Amazon and Greenfire Resources go up and down completely randomly.

Pair Corralation between Amazon and Greenfire Resources

Given the investment horizon of 90 days Amazon Inc is expected to generate 0.73 times more return on investment than Greenfire Resources. However, Amazon Inc is 1.37 times less risky than Greenfire Resources. It trades about 0.27 of its potential returns per unit of risk. Greenfire Resources is currently generating about -0.06 per unit of risk. If you would invest  19,578  in Amazon Inc on September 5, 2024 and sell it today you would earn a total of  2,238  from holding Amazon Inc or generate 11.43% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Amazon Inc  vs.  Greenfire Resources

 Performance 
       Timeline  
Amazon Inc 

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Amazon Inc are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Amazon displayed solid returns over the last few months and may actually be approaching a breakup point.
Greenfire Resources 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Greenfire Resources are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, Greenfire Resources is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Amazon and Greenfire Resources Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Amazon and Greenfire Resources

The main advantage of trading using opposite Amazon and Greenfire Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, Greenfire Resources can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Greenfire Resources will offset losses from the drop in Greenfire Resources' long position.
The idea behind Amazon Inc and Greenfire Resources pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.

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